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Intermediate Guide What is Gas and What Does it Mean?

Discussion in 'Intermediate Level' started by xyzzy, Oct 15, 2017.

  1. xyzzy

    xyzzy Master of None Staff Member Super Admin

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    If you've invested in an ICO, you have probably encountered "gas." This is because gas is related to how the Ethereum network operates. This guide will serve as an elucidation to what gas is.

    What is Gas?
    Gas, as the name suggest, can be thought of as the fuel for the Ethereum network. When you do anything that modifies the ETH blockchain (sending ETH, sending tokens, interacting with a contract, etc), there is a price for the computation associated with validating the addition to the blockchain. That price is calculated in gas and is paid in Ether.

    To calculate the total transaction cost in ether, we need to know the gas limit and the gas price.

    Total Transaction Fee = Gas Limit x Gas Price

    Using MEW's easy to understand analogy of gas in a car, we can understand gas limit as the size of the car's gas tank, and gas price is the cost per gallon/liter.

    Gas Limit
    Gas limit is the maximum amount of gas units you are willing to spend on a transaction. At the same time, there is a minimum amount of gas necessary to cover the cost of the computational resources to validate your transaction. If you don't include enough gas to cover that minimum, your transaction will fail.

    According to MEW, 21000 is the gas limit for standard transactions.

    Gas Price
    Gas price can be adjusted like gas limit. Why would you pay a higher fee for your transaction? Well, the more gas you pay, the faster the mining and validation of your transaction. If you set a lower gas price, there is less incentive for miners to validate your transaction so it will take longer.

    During normal times:
    • 40 GWEI Gas Price will almost always get you into the next block.
    • 20 GWEI will usually get you within the next few blocks.
    • 2 GWEI will usually get you within the next few minutes.
    During Token Creation Periods, these costs go crazy due to supply / demand:
    • 50 GWEI is the max gas price most new Token Creation Period contracts will accept. Anything above that and your TX will fail. Most is the keyword here—check with the Token Creation Period you wish to invest in before said Token Creation Period begins.
    • 50 GWEI would be the amount you should send in that case.
    • If you are trying to send during an Token Creation Period (but not to the Token Creation) you have 2 choices: wait a bit until the Token Creation Period is over, or increase the gas price over 50 GWEI.

    If you want to read more, you can read MEW's page on gas (which this guide is based off of): https://myetherwallet.github.io/knowledge-base/gas/what-is-gas-ethereum.html
     
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  2. CryptoRyuzaki

    CryptoRyuzaki Scholar

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    This was helpful - Thanks for the short and crisp guide!
     
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  3. armageddon

    armageddon Contributor

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    Wow! I didn't know that. Thank you very much for such an interesting and useful information.
     
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  4. profitboss

    profitboss Beginner

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    thanks for breaking it all down chief!
     
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  5. russel123456

    russel123456 Contributor

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    that's a good article
     
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  6. Renee Z

    Renee Z Beginner

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    Thx, this is helpful.
     
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  7. Innate

    Innate Contributor

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    Thank you very much for interesting and wonderful information.
     
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